Foundry Daily News

Suppliers are getting the word: Ramp up now

Suppliers for Japan’s top three auto companies were alerted last week about production plans for the fiscal year that begins April 1 and the news was surprisingly encouraging.

It was a sign of the improving times. Vehicle production is suddenly rising around the world and parts makers are being asked to ramp up output of components to meet the increasing demand. While no one is declaring that global sales will quickly return to 2007 levels, a startling number of rosy forecasts were issued last week.

“The entire auto industry is in the midst of a powerful recovery now,” said Michael Andersson, an analyst at Sweden’s Evli Bank. “The figures that have been coming in from China and the United States have pointed to just this.”

IHS Global Insight has said that it expects U.S. sales in February to be up by 13.3 percent over the same month last year, and U.S. production for the entire year is now forecasted at 7.09 million units, 26.9 percent above the 2009 level. In addition, automakers and suppliers are counting on double-digit sales rises in China and India this year to make up for an expected fall in European car demand.

Honda told its top suppliers that it would increase global production nearly 10 percent to 3.3 million vehicles in the business year starting next month, led by growth in Asia outside of Japan.

Troubled Toyota told its suppliers that it will increase global production plans by 19 percent to 7.57 million vehicles for 2010 as it sees increased demand in Japan and other Asian markets.

In December, Toyota told its suppliers that it planned to build 7.5 million vehicles in the 2010 calendar year. But it has now shifted that projection upward. In Japan, Toyota has increased its production forecast by 40,000 units because of incentive-backed demand for fuel-efficient cars.

In markets outside Japan, Toyota production is expected to be up by 100,000 units. Even in North America, where the production plan is down by 60,000 units this year because of the recall crisis, many expect the schedule to be revised upward because of the success of incentives.

Nissan had told its suppliers that it will build 3.7 million vehicles in the new fiscal year. That represents a 13 percent increase over the previous year and an all-time high.

A scattering of supplier results last week also sounded upbeat. For example, Autoliv, the world’s leader producer of airbags and seatbelts, increased its sales and earnings forecast for the January through March period. The company cited robust demand in Asia and North America.

“The main reason for our revised guidance is better than expected sales, primarily in North America and Asia due to higher light vehicle production accompanied by a favorable mix and market share gains,” CEO Jan Carlson said.

With European economies now improving, many government trade-in incentive programs are in the process of closing out. That could slow growth, but Autoliv says so far that it had not limited orders from carmakers.

The growth in demand appears to be having an impact on steel prices, which are rising again because of higher raw material prices. AK Steel Corp. recently told notified customers that it would raise sheet steel prices $40 a ton.

Of course, that means tough contract talks this year between suppliers and steel makers. But that’s the kind of thing you get when production comes back.

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Suppliers are getting the word: Ramp up now

<//b>29 March 2010<//b>

Suppliers for Japan’s top three auto companies were alerted last week about production plans for the fiscal year that begins April 1 and the news was surprisingly encouraging.

It was a sign of the improving times. Vehicle production is suddenly rising around the world and parts makers are being asked to ramp up output of components to meet the increasing demand. While no one is declaring that global sales will quickly return to 2007 levels, a startling number of rosy forecasts were issued last week.

“The entire auto industry is in the midst of a powerful recovery now,” said Michael Andersson, an analyst at Sweden’s Evli Bank. “The figures that have been coming in from China and the United States have pointed to just this.”

IHS Global Insight has said that it expects U.S. sales in February to be up by 13.3 percent over the same month last year, and U.S. production for the entire year is now forecasted at 7.09 million units, 26.9 percent above the 2009 level. In addition, automakers and suppliers are counting on double-digit sales rises in China and India this year to make up for an expected fall in European car demand.

Honda told its top suppliers that it would increase global production nearly 10 percent to 3.3 million vehicles in the business year starting next month, led by growth in Asia outside of Japan.

Troubled Toyota told its suppliers that it will increase global production plans by 19 percent to 7.57 million vehicles for 2010 as it sees increased demand in Japan and other Asian markets.

In December, Toyota told its suppliers that it planned to build 7.5 million vehicles in the 2010 calendar year. But it has now shifted that projection upward. In Japan, Toyota has increased its production forecast by 40,000 units because of incentive-backed demand for fuel-efficient cars.

In markets outside Japan, Toyota production is expected to be up by 100,000 units. Even in North America, where the production plan is down by 60,000 units this year because of the recall crisis, many expect the schedule to be revised upward because of the success of incentives.

Nissan had told its suppliers that it will build 3.7 million vehicles in the new fiscal year. That represents a 13 percent increase over the previous year and an all-time high.

A scattering of supplier results last week also sounded upbeat. For example, Autoliv, the world’s leader producer of airbags and seatbelts, increased its sales and earnings forecast for the January through March period. The company cited robust demand in Asia and North America.

“The main reason for our revised guidance is better than expected sales, primarily in North America and Asia due to higher light vehicle production accompanied by a favorable mix and market share gains,” CEO Jan Carlson said.

With European economies now improving, many government trade-in incentive programs are in the process of closing out. That could slow growth, but Autoliv says so far that it had not limited orders from carmakers.

The growth in demand appears to be having an impact on steel prices, which are rising again because of higher raw material prices. AK Steel Corp. recently told notified customers that it would raise sheet steel prices $40 a ton.

Of course, that means tough contract talks this year between suppliers and steel makers. But that’s the kind of thing you get when production comes back.